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Widgets were the rage of 2007 and 2008. Slide.com got a massive $58M dollars of funding, rumored at an almost unimaginable $500M valuation. RockYou.com goes a step futher, taking $85.5M dollars of funding to-date. All the bloggers were talking about leveraging widgets for viral marketing, and all the VCs were asking their startups to devise a widget or Facebook platform startegy. Fast-forward to 2009, today not a lot of bloggers mention about cool new widgets, and almost no one talks about what happened to those high-flying widget companies back in 2007. Here, let’s track these companies down.
The most well-known widget companies are definitely Slide.com and RockYou.com. Even though we don’t hear about them in the blogosphere as often as before, their traffic still looks amazing, and the user engagement is still holding up.
As for other widget sites, the traffic is not as impressive, and their growths seem to have stagnated.
Even though bloggers like me are tired of looking at widgets, I guess people are still using them like crazy. Slide.com and RockYou.com have definitely won the heart of their mainstream audience. They are definitely more than an one-time fad, but are they sustainable businesses?
It is not a hyperbole to claim that widgets are impossible to monetize. Youtube has tried many various ways to monetize their video clips, including but not limited to showing ads at the top, at the bottom, within the widget frame, before the video clip, after the video clip … None has worked out well so far, and Youtube is bleeding money. The problem with Youtube’s monetization is that most of its user-generated videos are content that no advertiser wants to pay for. Why? Ask yourself. Do you feel the urge to buy something after watching some random guy dancing on Youtube? If you don’t feel the urge to buy something, then no one wants to pay for that advertising spot to sell you something. Advertisers are not stupid.
I would argue that slideshows are even harder to monetize than Youtube videos. Youtube videos might have low-quality productions; at the very least, these videos often have a consistent theme. Slideshows are a random collection of non-famous people’s pictures. Now, which advertiser would pay for that?
Without a clear monetization model, widget companies would have to bet on its cash chest in order to survive this downturn. For the non-Slide and non-RockYou widget companies, the chance to get more funding has passed, and they would have to reinvent their product or face closure. As for Slide and RockYou, we don’t know if they will survive after two years, but right now, we will still be able to enjoy their services … for free.
Three weeks ago, ReadWriteWeb wrote an interesting article claiming that Netvibes, the most famous of all Web 2.0 start pages, is dying. Netvibes quickly responded to dispel this speculation, and ReadWriteWeb wrote a follow-up to clarify what they meant. That said, a lot of people still have doubts about Netvibes’ business model and eventual survival. After all, if things are rosey, why would Netvibes’ famous founder, Tariq Krim, stepped down as the CEO?
Let’s look at the numbers first (BizShark likes numbers).
Netvibes has been hovering around 600K unique visitors for a long time while its most prominent competitors, Pageflakes and Protopage, are basically dead. 600K is by no means a small number, but it does not entail mainstream adoption.
The biggest problem for start-pages’ survival is monetization. If you are an e-commerce site and you got 600K unique visitors, you will be pretty well-off. However, if you are a social network and you got only 600K unique visitors, then you should get ready to close doors Different traffics have drastically different monetization potentials, and social network traffic is known to be one of the worst out there. What about start-page traffic?
Start-page traffic is very hard to monetize because people use start-pages without any intent to buy stuff. If your traffic don’t want to buy your advertisers’ products, then you will not sign up anyone who’s willing to pay for it. Unfortunately for start pages, their users are not thinking about shelling out their money while they are on the start pages. In addition, the value proposition of start pages is the fact that you can easily digest a lot of information all at once. Any ad would reduce the valuable screen real estate and diminish the core value proposition. It’s almost impossible to strike the perfect balance between retaining users and putting up more ads.
Due to these reasons, I don’t think start pages have a sustainable business model at the end. A lot of people had been saying this since 2005, but Netvibes and Pageflakes were still able to secure 15M dollars and 4.1M dollars of funding respectively. I wonder what their pitches to the VC were; after all, their pitches must be very persuasive to convince anyone to invest that kind of money.
Most of us (the fact that you are reading this blog means that you are a web-savvy early adopter) use Delicious to manage our bookmarks. Delicious seems like a must-have tool to us, but most mainstream users either don’t know about it or don’t find it useful. Even after the much-hyped Delicious 2.0 launch last July, Delicious traffic has been hovering around 2M unique visitors. (The stat irregularity around July 2008 is due to the switch of Compete’s tracking from "del.icio.us" to "delicious.com" domain.)
By using BizShark, you can see that Quantcast and Alexa tell the same story about Delicious’ flat-line traffic. Even with Yahoo’s marketing power (Yahoo purchased Delicious back in 2005), Delicious seems to have hit a ceiling.
The traffic stagnation is not limited to Delicious though. Delicious’ competitors all experience the same flat-line trend.
Maybe the size of the social bookmarking market is only 2M ~ 3M unique visitors, which is much smaller than most people hoped back in 2005. That said, BizShark has identified a relatively unknown trend-breaker - Twine.com.
How does Twine.com break out the trend in only couple months? The answer might be SEO. In the recent interview with ReadWriteWeb, the Twine CEO Spivack said that 40% of Twine’s traffic comes from Google. Digging deeper into Twine’s page and link structure, we can see the Twine pages do contain very juicy SEO content. In fact, one can argue that Twine is a SEO page generator because it gathers content automatically around related keywords. Twine’s personal bookmarking features are not revolutionary against its industry competition; however, Twine’s SEO strategy is light years ahead of Delicious and others.
In fact, Delicious still rejects Google crawling on its informative and SEO-friendly content. We all know that Delicious is more than a simple bookmarking tool; rather, it doubles as a very relevant search engine that helps us discover new websites, very similar to Digg and Stumbleupon. By opening up its pages and content to search engines, Delicious can draw new audiences who can now take advantage its discovery engine. By employing a viable SEO like Twine.com has done, Delicious can break through its limited appeal as a bookmarketing tool, growing much bigger than it is today.
Three years ago, our first website launched on TechCrunch and got overwhelmed by the incoming traffic. We had to restart our web servers a couple of times just to keep the service alive.
Last week, BizShark launched on TechCrunch and we saw a decent increase in our traffic meter. We got a few thousand unique visitors, but it was 20 times less than what we received in 2006. Maybe our TechCrunch story this time was not attention-grabbing enough. Maybe there were too many TechCrunch posts that day, diverting people’s attention.
Or maybe people are simply tired of new websites and Web 2.0/3.0 news.
Three years ago, we often heard stories from our fellow web entrepreneurs about how the TechCrunch and Digg effect oftentimes killed their servers. Nowadays we don’t hear these stories anymore. In 2006, most people around us followed TechCrunch, Digg, Mashable, and other tech blogs religiously, clicking on every http link and trying out all the new sites. Now, people simply scan through the headlines. After years of exponential growth, TechCrunch and Digg seem to have reached a plateau (see traffic comparisons between TechCrunch and competing blogs).
The go-go Web 2.0 era is over. People have gone through a period of scrutinizing all the possible AJAX sequels to the corresponding Web 1.0 ideas (most of the Web 2.0 ideas are not new and have been tried before). Now people are getting tired of trying out variations of the same thing, and they are sticking to the tools that they are the most familiar with. It will be much harder for new startups to crack people’s old habits.
But good ideas are timeless and worth a try. That’s why we introduced BizShark to answer the timeless question, "What does this company do?", with a twist of automated competitive analysis. We hope you will find BizShark useful, and help BizShark withstand the test of time 